Financial terms not widely understood - study

New research has found that 17 per cent of people do not understand the term SSIA despite widespread coverage in the media…

New research has found that 17 per cent of people do not understand the term SSIA despite widespread coverage in the media

The research also found 28 per cent do not understand the term "credit rating," and 37 per cent do not understand what equity means.

The research, commissioned by the National Adult Literacy Agency (NALA) and the EBS Building Society, found that just 31 per cent of people feel they are well prepared financially to deal with unforeseen circumstances such as illness or disability.

Repsondents in Dublin are better prepared, at 39 per cent, while just 26 per cent of respondents in Connaught/Ulster felt prepared for such an eventuality. The figure rises to 45 per cent among those who are educated to third level.

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However difficulties in understanding financial terms are not confined to those from less advantaged backgrounds, as only 52 per cent of middle-income adults understood the term APR.

The Government's pension promotion campaign seems to have had some impact as the research found that 94 per cent of respondents felt that they broadly understand what pensions are.

On the topic of how financial institutions could improve their relationship with customers, 31 per cent said they could "provide information/brochures that are easy to understand".

The research is part of a three-year campaign by EBS and NALA to raise awareness of the issue of financial literacy amongst the financial services industry and members of the public.